Firms which cut production should sign staff up for training courses instead of sending them home, according to the Skills Secretary.

John Denham held up Staffordshire firm JCB as an example of good practice, as he spoke in the House of Commons.

Major West Midlands businesses which have been forced to cut production include Jaguar-Land Rover, which employs thousands at Castle Browmich, Birmingham, and Solihull. It has cut production so that factories operate a four-day week, after vehicle production across UK plants fell by more than a quarter.

But employees should not remain idle while factories were closed, Mr Denham said. Instead, businesses should work with local colleges to ensure the downtime was used to improve their skills.

Firms which invested in training were more likely to survive the recession, and come out of it ready to take advantage of the economic upturn when it comes, he added. The Skills Secretary held up JCB, the makers of construction equipment, as an example of best practice, after the firm arranged for staff to receive training from Derby College.

Workers at JCB, which employs 5,500 at sites across the West Midlands, are to attend courses for a week in the New Year. It follows a decision to keep factories closed for a week longer than usual over the festive break,

Mr Denham also highlighted Nissan, which has cut production at its plant in Sunderland. He said: “We know that companies that invest in training are two and a half times more likely to survive a recession than those who don’t.

“I would urge any company, large or small, which is considering short working to follow the example of Nissan and JCB and to talk to their local FE College or LSC to see what training they can offer their staff during downtime.

“We have stripped away many of the barriers that stood in the way of accessing training, and lots of companies can get financial support for training too.

“This kind of approach is better for staff morale and better for the long-term future of the business too. Companies like Nissan and JCB tell me that they can already see improvements in their business as a result of the training.”

Earlier this year, JCB staff agreed to accept a pay-cut and work a four-day week, in order to save jobs. It meant the average worker stood to lose about £50 a week. JCB’s production level has fallen by 19 per cent after orders dried up.

Workers on Jaguar’s XJ and XK production lines at Castle Bromwich have been put on a four-day week, in a bid to prevent vehicles stockpiling. Fridays are dedicated to maintenance and internal staff training but the firm is not working with FE colleges.

The challenges facing the West Midlands’ automative industry were starkly illustrated when it emerged car parts group Wagon Automotive was on the brink of collapse, threatening more than 600 jobs in Brownhills, Coventry and the UK head office at Birmingham Business Park, near Coleshill.

Conservative Shadow Business Secretary Alan Duncan has warned the Government may need to bail out failing firms, highlighting challenges in the automotive industry.